Is Geofencing Right For Your Business?

The Pros and Cons of Geofencing And Other Alternatives

“Geofencing” is a term that’s been coming up a lot lately; it’s the coolest new trend in the technology industry, and everyone wants to give it a try. Unfortunately, it’s not a one–size–fits–all solution, and a lot of businesses are wasting time and resources implementing an extensive (and expensive) geofence to avoid missing out on what’s being touted as the latest and greatest technology.

We’ll cover all the pros and cons in just a bit, as well as some geofencing options and alternatives, but first:

What is a geofence?

When you hear the word “geofence” you probably imagine an invisible barrier—and you’re not too far off. A geofence is a virtual (read: not physical) perimeter that defines a geographical boundary.

It’s kind of like those invisible pet fences that dissuade your dog from leaving the yard, but rather than burying a physical wire that sends signals to a specific device, geofence tracking is determined using virtual GPS points. After the geofence has been set in place, software (on any device that utilizes geofence technology) can then send alerts or triggers when a user enters or exits the geofenced territory.

If it sounds cool, it’s probably because it is. But, like any new technology, there are some ups and downs.

First, the good stuff about geofencing

Geofencing has been used successfully and effectively by many different organizations—specifically those that work with sensitive information or high–security operations. For example: A geofence can disable a device that contains classified info as soon as the device crosses a set perimeter, law enforcement can use geofencing in conjunction with ankle bracelets for people on house arrest, and administrators can be notified when an unauthorized person enters a high security area using a predefined geofenced boundary.

In not–so–high–security situations, geofencing can be used to alert shoppers to a great deal nearby, restaurants can use it to advertise today’s special, and ride–sharing services (like Uber) can use it to alert potential passengers when there’s an available driver in the area. Think Minority Report. While geofencing isn’t quite this high tech (yet), it’s a great example of how geofencing can interact with your mobile device.

It’s a pretty slick feature (when used appropriately), but there are also some serious downsides to using this up–and–coming technology.

Now, the not–so–good stuff about geofencing

As this technology gains popularity, more and more people are expressing concerns about the violation of privacy geofencing carries with it. In many cases, geofencing integrates with location-based services like FourSquare—automatically checking you in when you arrive at a certain location (which is great, if you want everyone on your friends list to know exactly where you are at every moment of the day).

Additionally, consider this: There are rumors circulating that Starbucks is thinking about establishing a geofence around each of their locations. The geofence would alert passersby that there’s a specialty coffee drink waiting for them just around the corner. It sounds pretty cool, but if you live in a place like New York City, the amount of alerts you would receive, simply by walking a few blocks down the street, would be outrageous.

A map of every Starbucks location in Midtown Manhattan.

Each red dot identifies a Starbucks location in Midtown Manhattan. Imagine being alerted each time you pass by the next location.


Even in smaller cities, the constant barrage of unsolicited phone alerts (even those advertising a great deal) would get tiring. Of course, users would have the ability of opt out of these alerts—which, as studies show, most of them would—effectively nullifying your geofencing efforts (and destroying your ROI).

But that’s just the tip of the iceberg. Whether you want to use geofencing to send push notifications to your customers, or you want to use it to keep track of your employees at work, there are a few things you should know.

High Costs, High Upkeep

App-based geofencing is expensive. Really expensive. The average cost for a mid-range app can run between $50–150k—and that’s just your upfront expense. Of course, you can build the app yourself (if you have the know-how) and save yourself a hefty fee, but app-based geofencing requires regular maintenance and upkeep, which can be pretty costly in and of itself—not to mention a huge chunk of your time.

Low Customer Adoption Rate

The bigger question actually isn’t the cost. It’s whether the investment is worth it—and the fact is, most of your customers probably won’t take advantage of geofencing alerts. According to Ask Your Target Market’s latest study, more than half of the people surveyed agreed that geofencing could be an effective marketing tactic, but those same people also stated that they definitely would not sign up to receive geofencing alerts.

AYTM study results show that people would NOT sign up for geofencing alerts.

A recent AYTM study showed over half of those polled would NOT sign up for geofencing alerts.

Why? Well, for one, mobile applications that use geofencing tend to take up a lot of space on the user’s mobile device. And when their smart phone notifies them that it’s getting too full, guess what’s going to be the first thing to go? That space sucking app. Secondly, in order for the app to function correctly, it has to be running at all times—using up precious bandwidth and draining the battery.

Data Strain and Battery Drain

On top of that, because geofencing requires the app to constantly check location, it uses a large (and we mean large) amount of data (not to be confused with basic GPS). The GPS function of the mobile device uses satellites to triangulate the user’s location (not a data suck in and of itself), but the app’s location services then uses that information to drop a pin on a map, which uses data—and more maps need to be downloaded as the user moves from place to place, which, you guessed it, uses data—not to mention battery life. In fact, “almost all consumer level devices (like smartphones) are unable to withstand the constant GPS connection due to limited battery life.” High data bills, limited phone space, and drained batteries will likely result in unhappy shoppers—which means lost customer loyalty and lost profits for your business. Does this mean GPS tracking is doomed as well? Not quite. (Keep reading!)

Intensive Upkeep

As for employers who want to use app-based geofencing to corral their employees, it can be a logistical nightmare. If you have employees in multiple locations (like construction sites or multiple offices), you’ll probably find yourself constantly changing or updating the geofence perimeter to keep up. And if your employees suffer from high data bills due to your imposed geofence restrictions, they’ll expect you to compensate them for those costs. Because of this, businesses who implement a geofencing system often drop it within a few short months.

Alternatives to Geofencing

Fortunately, if geofencing isn’t for your business because of logistics or cost, there are a few alternatives:

Network–based geofencing unlike its app–based counterpart, can target any mobile user connected to a cellular network (not just the 64% of Americans who own smartphones)—and they don’t have to have your app open, running, or even downloaded on their mobile device to participate. They just have to have the ability to send and receive SMS (text) messages. According to Rip Gerber, the founder of Location–as–a–Service, network–based geofencing has no impact on your customer’s’ battery life, data bill, or phone space, and because cost is determined on a per–location lookup basis, and can be dialed up or down as required, and there are no upfront costs involved. Sound too good to be true?

Here’s how it works: Rather than using a GPS location, network-based geofencing “uses carrier–grade location data to determine where SMS subscribers are located.” If the user has opted in to receive SMS alerts, they will receive a text message alert as soon as they enter the geofence range. As always, users have the ability to opt–out or stop the alerts at any time.

The downfall? If location accuracy (down to the very coordinates) is important to your campaign, network–based geofencing might not be the best solution for you. Depending on the location capabilities of the user’s mobile device, pinpointing their location ranges from super accurate to, “accurate within one to five city blocks.” Additionally, this technology requires you to pull or request locations manually—which works well for restaurants looking to promote their happy hour (they need only look up the location of their subscribers once per day), but not so well for businesses who require constant location tracking.

Beacons can achieve the same goal as app–based geofencing without invading anyone’s privacy or using a lot of data. They can’t pinpoint the user’s exact location on a map like a geofence can, but they can still send signals when it’s triggered by certain events (like entering or exiting the beacon’s signal, or getting within a certain distance of the beacon)—and they can determine approximately how close the user is to the beacon, down to a few inches. Best of all, because beacons rely on bluetooth technology, they hardly use any data and won’t affect the user’s battery life.

Here’s how it works: A beacon is a small, low energy (one battery lasts about three years) mobile device that uses bluetooth signals to detect a user’s proximity and send push notifications to those within range. They don’t contain any data, they don’t connect to the internet, and (most importantly), they only send signals, they don’t receive them. That said, it’s up to you (and your app developers) to create an app that interacts seamlessly with that beacon. It’s up to the app and operating system to monitor for that beacon and respond accordingly. No data is sent back to the beacon, making this option the safest when it comes to privacy concerns.

Check out this video for more information.

Again, if location accuracy is important, beacons might not be the right choice for you. And, while beacons are great for microlocations (like a specific spot or floor of a department store), they’re not so great for larger locations—like a full city block. Also, because beacons are technically a physical mobile device, they can be lost, broken, or stolen—but at $10-30 a pop, they’re more than affordable to replace. And if you find yourself needing to re–define your geofence on a consistent basis, a beacon might be just the ticket: You can simply pick it up and move it.

Breadcrumb tracking is another great alternative to geofencing. It’s a low energy, low cost solution for GPS tracking (and we offer it right here at TSheets!). Rather than constantly tracking your GPS location (a huge drain on data and battery life), breadcrumb tracking captures your location on a per–instance basis. According to Silvertrac, a management app for security guards, “Breadcrumb tracking is designed to verify the location of reported issues, rather than creating a virtual fence.”

TSheets has saved our company so much time and energy. We used to keep paper time cards for all our employees. We thought by adding GPS in the vehicles that that would help us keep better track…WRONG! Then we stumbled on TSheets and it has been amazing. The guys are much happier cause they don’t have to think, they just open and app and boom, ready to go. Mo Haider, V.I.P Landscaping

At TSheets, we use breadcrumb–type GPS tracking to pinpoint an employee’s location when they clock in, clock out, go on break, or change job codes. And, while the employee is on the clock (and as long as they move more than 150 feet), TSheets will record a GPS ping every 5–10 minutes. These pings use a very small amount of data (or none at all if the employee is connected to wifi) and are accurate within a 100–meter radius. Want to learn more? Check out our GPS FAQ.

The best part? Breadcrumb tracking isn’t restricted to a predefined perimeter. In our case, business owners can see at a glance where their employees are (in real time) and where they’ve been—whether they’re on the job site or not (as long as they’re clocked in). If you have workers on the go, or a crew on the move, there’s no need to deal with the hassle of moving your virtual geofence or even your beacon, and no need to manually pull location points. The app does it for you.

However, while breadcrumbs are perfect for business owners or those looking to track GPS points on a map, they’re not so great for businesses looking to promote their products or sales. Mobile users must be interacting with the app or tracking device (e.g., be clocked in—or, in your case, checked in) in order to put a pin on the map, and unless they’ve granted the app or device access to location services (even when they’re not using the map), you’ll have no way of knowing then they’ve crossed into your territory—and no way of knowing when to send them a push notification.

So, is geofencing right for your business? Maybe. But there are other cost effective and investment worth options if it’s not.

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